Article Synopsis :
This comprehensive 200+ page report from Insurance Nexus, based on over 1,000 survey responses from around the world, aims to understand the global state of the insurance industry, not just in terms of the overarching themes but also on a regional basis to create a first-of-its-kind ‘map’ of insurance trends worldwide.
The report explores the key themes in today’s digital insurance universe, e.g., analytics, IoT, AI and customer-centricity, and how these themes vary on a region-by-region basis.
Key high-level findings include:
|Top 10 External Challenges Facing the Industry|
|2||664||Changing customer expectations|
|3||490||Digital channel capabilities|
|4||460||New emerging risks|
|5||435||Changing economic conditions|
|8||206||New entrants to the market|
|Top 5 Internal Challenges Facing the Industry|
|1||1032||Lack of innovation capabilities|
|3||759||Finding and hiring talent|
|5||373||Lack of company-wide dedication to core priorities|
|Top 10 Insurer Priorities (Global)|
The main body of the report is organized around the following ‘key themes’, going into a fair amount of depth on each, depending on your unique area of interest:
- Digital Innovation
- Internet of Things
- Marketing and Customer-Centricity
- Investment Management
- Product Development
The report sketches out three overarching ‘megatrends’, attempting to distinguish between paradigmatic and cyclical shifts. The first megatrend is a cyclical shift; the latter two could justifiably be termed paradigmatic (and insurers need to stake out positions on all three):
- Worldwide low interest rates coupled with soft market conditions: Survey respondents in all global regions explain their current challenges at least in part through low interest rates. Everywhere, investment margins are being squeezed, forcing carriers the world over to re-evaluate their core underwriting business in pursuit of efficiencies.
- The complexification of risk in today’s increasingly globalized societies: There are currently 29 megacities (populations exceeding 10 million people), and this figure is expected to exceed 40 by 2030. As global populations rise to a forecast 8.5 billion people by 2030, this will likely lead, on balance, to higher pollution levels, increased political instability and greater movements of people. These figures point to a future in which existing liability classes become more problematic, with greater accumulation risk. In the now, there is hardly a single insurance product line where the difficulties faced by insurers aren’t increasing.
- Distribution disruption and insurance’s customer-centric ‘turn’: There is a prevailing view – not just confined to the vibrant and vocal InsurTech community – that something is wrong with the customer relationship implicit in traditional insurance, at least in personal lines. The relationships have long been standoffish in nature, with one subsidiary industry dedicated to bumping customer claims up and another to hauling them back down again (loss assessment and loss adjustment). Meanwhile fraud and counter-fraud soak up huge amounts of the industry’s capital. In broad strokes, the new relationship being demanded and pursued is one in which client and insurer are ‘risk partners’, whereby it is in each party’s interest to share as much information with the other as possible so that they can work together proactively to reduce exposures.
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Digital Insurer's CommentsInteresting. Fewer than 12% of survey respondents work in IT, yet the top three external and internal challenges, and top three areas of investment, are decidedly technological in nature—and they all revolve around the presence, quality, and availability of digital data.
Digital innovation, customer-centricity, and talent acquisition are top-of-mind issues with executives in insurance organizations worldwide. This report is yet another piece of evidence of how the industry has changed, and keeps changing, at an accelerating rate.
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